BIS collaborates with central banks to address cross-border compliance through Project Mandala

Project Mandala uses decentralized systems to facilitate cross-border payments and increase conformance in numerous jurisdictions.

In an Oct. 28 statement, the Bank for International Settlements (BIS) announced that it has partnered with numerous central banks to demonstrate regulatory compliance in cross-border transactions through Project Mandala.

The BIS Innovation Hub Singapore Centre and the central banks of Australia, Korea, Malaysia, and Singapore are all involved in this initiative. The objective of the initiative is to address the regulatory obstacles that are associated with cross-border transactions in various jurisdictions.

Compliance with regulatory frameworks that differ frequently poses a challenge for cross-border transactions. Delays and increased expenses may result from this disparity. Project Mandala endeavors to address these concerns while simultaneously adhering to regulatory standards.

The goal of Project Mandala is to improve the efficacy and pace of cross-border transactions by automating compliance processes. This will also enhance transparency with respect to country-specific policies and offer regulators real-time reporting.

Maha El Dimachki, the Head of the BIS Innovation Hub Singapore Centre, observed that the initiative implements a compliance-by-design methodology. The objective of this approach is to safeguard the integrity of regulatory inspections and anonymity.

The initiative has progressed to the proof-of-concept stage, which is consistent with the G20’s priority of improving cross-border payments, as indicated on the BIS page. It is a substantial advancement due to its capacity to expedite transactions and reduce costs while maintaining compliance.

Embedding compliance within central banks and financial institutions, Project Mandala employs a decentralized system to facilitate cross-border payments. A rules engine, a proof engine, and a peer-to-peer messaging system constitute this infrastructure.

These components ensure that all necessary conformance checks are conducted prior to the commencement of payments. Upon completion of these checks, the Mandala system generates proof of conformance to accompany any digital settlement asset or payment instructions across borders.

Meanwhile, Mandala also seamlessly integrates with established payment messaging systems such as SWIFT and emerging digital asset settlement systems, such as wholesale central bank digital currencies (CBDCs).

This dual integration improves Mandala’s adaptability and versatility, enabling it to support both current financial infrastructures and future digital asset ecosystems. In addition, Mandala has accomplished the seamless integration of programmable compliance for digital assets into smart contracts.

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